Could Malawi’s new cash card system simplify corporate accounting?

Corporate credit cards and siloed budgets can create a complex and expensive system for a large corporation to keep tabs on. A new idea launching in Malawi could present a surprising solution.

The payments company Malcolm is set to launch a charge card service called MobiMax, having just gained approval from the Reserve Bank of Malawi (RBM). The country’s population is heavily underbanked and the system aims to shift to a cashless system while skipping the conventional steps of opening bank accounts or applying for debit and credit cards.

In fact, the RBM specifically gave its approval on the basis that “there is no interface with cardholders’ bank accounts or employees’ or retailers’ bank accounts,” meaning that the card has “no direct effect” on existing financial systems. As such, it’s a system that can get off the ground fast, with far fewer regulatory shackles.

The scheme offers an alternative by allowing employers to issue interest-free cards to their staff with a set limit of 30% of their salary. Employees then use these to pay for goods and services, with the total deducted from their wage packet at the end of the month.

While this system is specifically aimed at employees, a relatively small shift in emphasis could turn it into a tool for businesses, too. A pre-paid card system could help departments to keep track of budgets and avoid overspending, while at the same time gaining access to necessary funds without having to waiting for lengthy sign-off procedures. Although chunks of money would need to be released at intervals, it could help corporations to manage their cashflow more effectively, by avoiding nasty surprises or budget overruns.

A lack of access to banking has traditionally been seen as a hurdle for many African states, but fast-evolving fintech means that the continent is now positioned to adopt new ideas and approaches at a much faster rate than Western counterparts. If we’re looking for the future of financial innovation, countries like Malawi may be an unexpected source of inspiration.

Deutsche Bank plans to partner with fintechs that have complementary business models, rather than buying out tech start-ups and competing in the market, bank executives said at press briefing this week. They also discussed future strategies for the technology, securities and payments spaces.